MtGox has VANISHED. So where have all the Bitcoins gone?

Rumours swirl of buyout, 750,000 AWOL BTC...


Almost one in 10 of the world's Bitcoins disappeared during the collapse of MtGox, it has been claimed.

The allegations were made in what was purported to be an "internal MtGox crisis presentation". The sloppily written briefing claimed that 744,408 Bitcoin were stolen over a period of several years. There are currently about 12,500,000 Bitcoins in existence.

However, CEO Mark Karpeles seemed upbeat when he told Reuters just before the publication of this story:

We should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can't tell much more for now as this also involves other parties.

Protesters have gathered outside the offices of MtGox in Tokyo and the home of its CEO, Mark Karpeles, who quit the board of the Bitcoin Foundation late yesterday.

In the absence of any facts, wild rumours began to circulate, including links to the unverified document circulating on the internet suggesting the troubled Bitcoin exchange had collapsed due to a "theft which went unnoticed for several years".

Just minutes later, the announcement appeared on the website:

Dear MtGox Customers, In the event of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

It did not comment on the deletion of its Twitter account nor did it respond to allegations that surfaced relating to the supposed "internal document".

The halt to trading was officially blamed on a “transaction malleability” bug, which MtGox previously said was the reason it stopped Bitcoin transactions earlier this month.

Last week, MtGox said it did have a fix ready, but said that testing and implementing it would take time. No firm date was given for when Bitcoin withdrawals would resume.

Since then, the website was wiped clean (prior to the recent appearance of the statement) and the company's Twitter account also appeared to have been cleared.

Crisis strategy?

Ever since Bitcoin advocate Ryan Selkis published the document, a debate has raged about whether it is real or not. Selkis insisted he had verified the document with several insiders at MtGox.

"This is catastrophic, and I am sorry to share this," Selkis wrote. "I do believe that this is one of the existential threats to bitcoin that many have feared and have personally sold all of my bitcoin holdings through Coinbase."

The document he leaked was written in poor English, leading many people in the Bitcoin community to question its veracity. It featured redacted figures which can easily be seen by downloading the file and opening it.

These optimistic numbers predicted that MtGox's net income was set to skyrocket in the coming years, from $286k in 2012/2013 to $39m in 2015/2016.

"Regardless of malleability and regulatory issues, MtGox's main problems are massive robbery and poor Bitcoin accounting," the document alleged. "However, the business as an exchange is highly profitable and healthy when run properly."

This claim was apparently contradicted elsewhere in the document.

"The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company," the briefing continued. "However, with Bitcoin/crypto just recently gaining acceptance in the public eye, the likely damage in public perception to this class of technology could put it back 5~10 years, and cause governments to react swiftly and harshly. At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public."

Many observers believe the document is fake. On Reddit, one forum member said: "This person is citing a supposed 'leaked document' that looks like it was written by a six year old running a lemonade stand. New[s] sources have quote it without valid reason too [sic]. It's nonsense."

Bitcoin community rallies around ... hang on

Digital wallet Coinbase, rival exchanges Bitstamp.net and China BTC as well as other players in the Bitcoin community released a joint statement, cryptically referring to a "tragic violation of trust" performed by "bad actors" whom they did not name.

This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. Mtgox has confirmed its issues in private discussions with other members of the bitcoin community

Buyout?

Some people have suggested that MtGox is set to be sold to an undisclosed buyer, a theory supported by the source code of its homepage on Tuesday morning:

Mt Gox homepage source

"put announce for mtgox acq here"

This would appear to be borne out by the recent statement from Karpeles, with his statement to Reuters mentioning that "this also involves other parties".

Reddit detectives found a record on the blockchain showing a series of transactions stretching back several years, which amounted to a total of more than 750,000 Bitcoins.

Although this looks suspicious, there is no way of telling whether this is actually MtGox's Bitcoin wallet.

"This is the beauty of the beauty of Bitcoin," wrote another Reddit user. "It could be anything or anyone. There's no real way to know. It's totally public and open, yet still pretty anonymous."

Other observers speculated the collapse was a "social engineering" stunt, designed to send the price of Bitcoin tumbling. Whoever devised this plan would then snap up the cheaper funny money and sell it off again when the price buoyed upwards.

From the language of the CEO's statement, we gather the real story is not quite so dramatic. We'll update when we know more. ®

Similar topics

Broader topics


Other stories you might like

  • Snowflake stock drops as some top customers cut usage
    You might say its valuation is melting away

    IPO darling Snowflake's share price took a beating in an already bearish market for tech stocks after filing weaker than expected financial guidance amid a slowdown in orders from some of its largest customers.

    For its first quarter of fiscal 2023, ended April 30, Snowflake's revenue grew 85 percent year-on-year to $422.4 million. The company made an operating loss of $188.8 million, albeit down from $205.6 million a year ago.

    Although surpassing revenue expectations, the cloud-based data warehousing business saw its valuation tumble 16 percent in extended trading on Wednesday. Its stock price dived from $133 apiece to $117 in after-hours trading, and today is cruising back at $127. That stumble arrived amid a general tech stock sell-off some observers said was overdue.

    Continue reading
  • Amazon investors nuke proposed ethics overhaul and say yes to $212m CEO pay
    Workplace safety, labor organizing, sustainability and, um, wage 'fairness' all struck down in vote

    Amazon CEO Andy Jassy's first shareholder meeting was a rousing success for Amazon leadership and Jassy's bank account. But for activist investors intent on making Amazon more open and transparent, it was nothing short of a disaster.

    While actual voting results haven't been released yet, Amazon general counsel David Zapolsky told Reuters that stock owners voted down fifteen shareholder resolutions addressing topics including workplace safety, labor organizing, sustainability, and pay fairness. Amazon's board recommended voting no on all of the proposals.

    Jassy and the board scored additional victories in the form of shareholder approval for board appointments, executive compensation and a 20-for-1 stock split. Jassy's executive compensation package, which is tied to Amazon stock price and mostly delivered as stock awards over a multi-year period, was $212 million in 2021. 

    Continue reading
  • Confirmed: Broadcom, VMware agree to $61b merger
    Unless anyone out there can make a better offer. Oh, Elon?

    Broadcom has confirmed it intends to acquire VMware in a deal that looks set to be worth $61 billion, if it goes ahead: the agreement provides for a “go-shop” provision under which the virtualization giant may solicit alternative offers.

    Rumors of the proposed merger emerged earlier this week, amid much speculation, but neither of the companies was prepared to comment on the deal before today, when it was disclosed that the boards of directors of both organizations have unanimously approved the agreement.

    Michael Dell and Silver Lake investors, which own just over half of the outstanding shares in VMware between both, have apparently signed support agreements to vote in favor of the transaction, so long as the VMware board continues to recommend the proposed transaction with chip designer Broadcom.

    Continue reading

Biting the hand that feeds IT © 1998–2022